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  3. Journal of Economic Literature
  4. December 2011
  5. Nonlinear Models of Measurement Errors

Journal of Economic Literature

ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)

Nonlinear Models of Measurement Errors

  • Xiaohong Chen
  • Han Hong
  • Denis Nekipelov
Journal of Economic Literature
vol. 49, no. 4, December 2011
(pp. 901–37)
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Abstract

Measurement errors in economic data are pervasive and nontrivial in size. The presence of measurement errors causes biased and inconsistent parameter estimates and leads to erroneous conclusions to various degrees in economic analysis. While linear errors-in-variables models are usually handled with well-known instrumental variable methods, this article provides an overview of recent research papers that derive estimation methods that provide consistent estimates for nonlinear models with measurement errors. We review models with both classical and nonclassical measurement errors, and with misclassification of discrete variables. For each of the methods surveyed, we describe the key ideas for identification and estimation, and discuss its application whenever it is currently available. (JEL C20, C26, C50)

Citation

Chen, Xiaohong, Han Hong, and Denis Nekipelov. 2011. "Nonlinear Models of Measurement Errors." Journal of Economic Literature, 49 (4): 901–37. DOI: 10.1257/jel.49.4.901

JEL Classification

  • C20 Single Equation Models; Single Variables: General
  • C26 Single Equation Models: Single Variables: Instrumental Variables (IV) Estimation
  • C50 Econometric Modeling: General